The IPO Pause: is It Regulation, Rates, or a Reckoning?
For years, the number of publicly listed companies in the US has been dwindling. Now, a shift appears too be underway, with 2025 already seeing more IPOs than any year since 2000 (excluding the anomaly of the 2020-21 SPAC boom). But is this a genuine resurgence driven by a more welcoming regulatory habitat, as SEC Chair Mark Atkins suggests, or is it a consequence of shifting economic realities? The answer, as is often the case in finance, is likely a complex interplay of both.
Atkins argues that overly stringent regulations and the influence of activist shareholders have made the public markets less appealing. this sentiment resonates with many in the banking and legal sectors, who see his efforts as a necessary correction to the expansive regulatory push under his predecessor, Gary Gensler.Gensler’s SEC ventured into areas like climate change disclosure and diversity policies, prompting concerns about overreach and increased compliance burdens. Easing some of that friction, the argument goes, could unlock a wave of listings and improve market efficiency.
“If we can streamline the process of going public, we might see more high-quality, profitable companies accessing the capital they need,” explains Lance Dial, a partner at K&L Gates. “A less burdensome regulatory landscape could be a significant catalyst.”
However, a crucial question remains: is this the whole story? A compelling counter-narrative suggests that the IPO drought wasn’t primarily caused by regulatory headwinds, but by exceptionally loose credit conditions. For much of the past decade, particularly in the period following the 2008 financial crisis, companies – especially those in the high-growth tech sector – could readily secure funding from private equity and private credit markets. This allowed them to scale rapidly without the scrutiny and reporting requirements of a public listing. Profitability frequently enough took a backseat to growth, fueled by the expectation of continued private funding rounds or eventual acquisition.
the Tide Turns with Rising rates
The landscape has dramatically changed with the rise in interest rates. The era of “easy money” is over. Private equity firms and credit funds are now facing greater pressure to demonstrate returns to their investors. This, in turn, is forcing the companies they back to prioritize financial discipline and, in many cases, consider the accountability that comes with being a public company.
The numbers support this view. The stabilization of US-listed companies in the mid-2010s, followed by a recent uptick, coincides with the beginning of the interest rate hiking cycle. Bankers are reporting a surge in companies preparing to go public, eager to capitalize on a robust stock market – the S&P 500 has climbed nearly 15% this year despite recent volatility. Private equity firms, facing pressure to return capital to their limited partners, see the public markets as an attractive exit route.
A Pendulum Swinging Through History
This dynamic isn’t new. The US regulatory environment has historically swung between periods of lax oversight and stringent enforcement. The dot-com bubble burst of 2001 and the financial crisis of 2008 were both followed by waves of new regulations designed to prevent future abuses.These regulations, while often necessary, frequently sparked complaints about stifled innovation. And, inevitably, the pendulum woudl swing back.
We appear to be witnessing another such pullback. SEC enforcement actions have fallen to record lows under the current governance, with only four announced in the frist nine months of the year. This trend raises a critical question, as Weil Gotshal partner Adé heyliger puts it: “Can we calibrate this pullback? we’ve seen how overregulation can stifle growth, but underregulation can create the conditions for another crisis.”
The Value of scrutiny – Even When It’s Uncomfortable
Atkins is right to advocate for more public listings.A vibrant public market is essential for capital formation and economic growth. However, his approach carries a risk. While activist investors and shareholder lawsuits can be frustrating for well-managed companies, they also serve a vital function: holding businesses accountable.
The scrutiny of public markets is particularly important for newly listed companies with untested leadership. When retail investors – including those saving for retirement – invest in these companies, those CEOs should be held to a higher standard of transparency and responsiveness. Reducing that pressure could embolden poor behaviour and ultimately undermine investor confidence.
The current moment presents a unique prospect to strike a balance. A more streamlined regulatory process, coupled with robust enforcement of
